by David Chapman
Staff Writer
If City Council follows the recommendations of two of its committees to deny a waiver to find out the true pension costs this year, the City could face another $5.8 million budget shortfall this year, and maybe more.
The Council Finance Committee on Tuesday denied a waiver to delay an actuarial study to find the true costs needed to fund the general employee pension plan.
The waiver was denied in a 2-5 vote, with Council members John Crescimbeni and Warren Jones in support. The waiver would allow a one-year delay in the study.
The Council Rules Committee denied the waiver with a 0-7 vote last month.
The City Charter requires the study to be conducted annually, while the state only requires it once every three years.
It was last conducted for the 2009-10 fiscal year because the Council waived it last year.
Several Council members said before the Tuesday vote that they didn’t favor “punting” the study again.
If the study, which would cost $40,000-$50,000, determines that the 2011-12 valuations were higher than those found in 2009-10, then the City would be on the hook for the difference in the upcoming budget.
The $5.8 million is the anticipated difference, and it could be slightly higher.
If Council were to again waive the study, it would be forced to conduct it next year as required by state law regardless of how the economy and market fare.
A memo from the Council Auditor’s Office to Council members advised that waiving the study again is “counter-intuitive” and that adding money to the fund would benefit from stock-market gains.
“I don’t think we can afford to take the risk” of delaying the study, said Council member Richard Clark, who chairs the Finance Committee.
The bill was requested by the Jacksonville Retirement Board of Trustees on the basis that such a study done now would not reflect stock market gains during the current fiscal year while also requiring an increase of the City’s pension contributions for the coming fiscal year.
Proponents of the measure, including Council President Stephen Joost, have said the economy’s continued rebound would yield a better valuation and overall result.
Mayor Alvin Brown’s proposed budget did not include the study costs or its potential ramifications. Chris Hand, Brown’s chief of staff, said he would attempt to change members’ minds before the full Council meeting on Tuesday.
The matter had been deferred once in the Finance Committee. During public comment before the vote, Terry Wood, a member of the retirement board, asked for the measure to be deferred again. He asked for a committee member to attend an Aug. 17 meeting of the pension board to learn more about the reasons for the waiver.
The Finance Committee already would have had another meeting as well as the first budget workshop by then.
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